Daily Earth Science Environment Repost Vote

Environmental Economics: America’s dam problem

Ten thousand residents of Midland, Michigan, evacuated their homes as a nine-foot surge of water inundated the town. The Tittabawassee River was flooding, but not from the heavy rains. Instead, the floodwaters were from the failure of the Edenville Dam just upriver. As the waters swept downstream, they then overwhelmed another dam at Sanford Lake. Edenville Dam is only one of the thousands of structures that form America’s dam problem.

Every household that went underwater can expect large bills to repair and return to normal. Some homeowners will have flood insurance, and others won’t. The flooding poses unexpected but manageable costs for some households. For others, though, the ordeal represents a genuine financial hardship. 

Boyce Hydro Power LLC owns the Edenville Dam, and the company produced and sold hydroelectric power until 2018 when their license was revoked. State inspections in 2018 questioned whether the dam could withstand a big flood. The inspection report said that the dam owners had an “extensive record of noncompliance” over many years.

America’s dam problem

Dams of all sorts present a problem for America. In 2017 the American Society of Civil Engineers gave a “D” in safety to 91,000 of these dams. They estimated that the cost of fixing dams whose failure threatened lives was $45 billion. The 96-year-old Edenville Dam was built in 1924, making one of the 91,000 safety hazards.

The Edenville dam failure was not an “act of God,” rather, it was a case of deferred maintenance. Engineers recognized and documented the problems with the dam. The choice not to act on available solutions was consciously made by the dam owners.

If I have a large tree in my yard, and it falls on my neighbor’s home during a storm, it will probably be deemed an “act of God.” But, if that same tree were inspected by a licensed arborist and declared a safety hazard, then the event would be an “act of negligence.” However, it is unclear if the same liability principles apply to businesses in the case of dam failures. The Governor of Michigan declared that the state would pursue compensation for damages incurred, but only time will tell if that effort yields results.

The economics

The economics of pollution often rely on a cost-transfer mechanism. Profits rise if the costs of responsibly disposing of waste are avoided. However, if those disposal costs are deferred into the future, then the bill will be picked up by the taxpayer or other unlucky individuals. Superfund cleanup sites are prime examples of how these economics work.

The same principles apply to dam failures when the structure becomes a recognized safety hazard. Deferring maintenance and repairs is simply pushing the costs into the future to preserve current profits. If the state is forced to step in and correct the problem, then the taxpayers foot the bill. If the dam fails, then the flooded homeowners may pay the final costs. America’s dam problem is due in part to the number of aging structures that have outlived their designed life span. 

Good environmental economics depend on mitigating damage as problems arise. Unfortunately, this often means that profits fall. It is also true that, in some cases, a business is not profitable if it pays the full costs of avoiding environmental damage. But the answer is not to defer those costs as a problem for future generations. If a company can’t compete fairly in a free market, then it shouldn’t be in business. 

It is false economics to let businesses damage the environment and rely on taxpayers or future generations to foot the bill. The real problem, however, is that the current cost-deferral model is politically expedient. Corporate and business donors balk at anything that reduces profits, and consumers (voters) don’t want to pay higher prices for goods, services, and utilities. So, before the finger-pointing begins, we should all take a close look at what we are voting for when we go to the ballot box.   


The politics of climate change and climate policy (Source: ArcheanWeb) – https://archeanweb.com/2020/02/10/the-politics-of-climate-change-and-climate-policy/  Also:

The economics of environmental pollution (Source: ArcheanWeb) – https://archeanweb.com/2020/01/02/the-economics-of-environmental-pollution/  Also:


Mich. governor says state will seek ‘legal recourse’ over failed dam (By Jacob Carah, Frances Stead Sellers, Andrew Freedman and Steven Mufson; Washington Post) – https://www.washingtonpost.com/national/2020/05/20/8ee0b9b6-9aad-11ea-a282-386f56d579e6_story.html  Also:

More dams will collapse as aging infrastructure can’t keep up with climate change (By Emma Newburger, CNBC) – https://www.cnbc.com/2020/05/21/more-dams-will-collapse-as-aging-infrastructure-cant-keep-up-with-climate-change.html  Also:

Feature Image: Teton Dam Flood (Modified) – By WaterArchives.org from Sacramento, California, USA – [IDAHO-L-0010] Teton Dam Flood – Newdale, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=41039960

William House
William is an earth scientist and writer with an interest in providing the science "backstory" for breaking environmental, earth science, and climate change news.